Good evening. I‘m Chris Matthews in Washington. Leading off tonight, Senate Democrats beat public option. Finally, the debate over health care has reached the acid test. Late today, the Senate Finance Committee voted to reject the public option by a vote of 13-10. Three Democrats joined the united Republicans: Chairman Baucus, Budget Committee Chairman Conrad; and Senator Blanche Lincoln of Arkansas.

Two other Democrats, Carper of Delaware and Nelson of Florida, voted to kill another version of the public option.

So, where are we? Will the Democrats now move to lock in a compromise that would create a public option in the future if private insurance companies fail to meet the test of affordability? Is Senator Olympia Snowe‘s proposal for this so-called trigger to a public option now the only game in town?

One of the chief supporters of the public option, Senator Chuck Schumer, will be here, along with Senator Orrin Hatch, who wants to make sure that taxpayer health care subsidies don‘t pay for abortions.

Plus, as the Republican Party struggles to reinvent itself, two women of the right are making their voices heard. One is Sarah Palin, who appeals to the party‘s base; and Liz Cheney, the daughter of—and rear gunner for her father Dick Cheney. Could Palin and Cheney breathe some life back into the Republican Party? Our strategists will break down their value to Republicans and to Democrats.

And filmmaker provocateur Michael Moore will be here to talk act his new documentary “Capitalism: A Love Story,” and tell us, if I can get him to do that, what he wants to replace capitalism with.

Also, Congressman Patrick Kennedy, son of the late Ted Kennedy, warns against the danger of the too-hot fight over health care could trigger violence. That‘s in “The Politics Fix” tonight.

Where are we now, Todd, right now, that the Senate Democrats, three on one votes, five on another vote, voted to kill the public option?

TODD HARRIS, REPUBLICAN STRATEGIST: Well, I think there is not a greater fissure within the Democratic Party right now than this public option, and there‘s not a single issue anywhere on the horizon that has more potential to do harm at the ballot box for Democrats next November than this issue.

Which is exactly why you see senators like Blanche Lincoln, who‘s very vulnerable in Arkansas, voting against the public option. She‘s getting hit on both sides from the right and the left over this issue.

And I think you‘re going to see a lot of Democrats, especially those 84 House Democrats that won in districts that were carried by either George W. Bush in ‘04 or John McCain in ‘08, you‘re going to see a lot of those Democrats peeling off on the House side as well.

MATTHEWS: OK. Here senators elected to six-year terms all voted against the various forms of the public option today. Tom Carper of Delaware, Max Baucus of Montana, the chairman of the committee, Kent Conrad, the Budget Committee chairman, Blanche Lincoln of Arkansas, and Bill Nelson of Florida. So two from relatively moderate states, Florida and Delaware, join them on those votes.

So what do you make of this?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: Well, I think it‘s—you just said it. There are two from relatively moderate states. And the others who oppose it are from relatively moderate states at all (ph).

Todd is actually right, although he overstates it, as Republicans so often do. There is a fissure within the Democratic Party. Many, many people think that a public option is absolutely vital to health care reform, and there are others who don‘t think that health care reform revolves around a public option, that it‘s about expanding coverage, bringing costs under control, and holding insurance companies accountable.

And I think President Obama and Max Baucus and the moderates are in that latter camp, and then the progressives are in the more.

MATTHEWS: Let‘s talk turkey here.

MCMAHON: . public option camp.

MATTHEWS: It seems like after all of this long talk, well, let‘s go to Senator Schumer, we have him joining us right now, the strategists will be right back later. Let‘s bring in Senator Chuck Schumer of New York, a member of the Finance Committee and a strong champion of the public option.

You had two votes today, Senator, one five Democrats voted against, the public option offered by Jay Rockefeller, then you lost with three Democrats voting against you. Is there hope for the public option?

SEN. CHUCK SCHUMER (D-NY), FINANCE COMMITTEE: Oh, yes, I believe there is. If you follow this closely, we said all along we never expected to win in Finance Committee. In fact, there some were who saying we were going to get so few votes we shouldn‘t bring it up.

We gained votes today to get 10 votes in this, which is the most difficult terrain for the public option because the Finance Committee is more conservative than the Senate Democrats as a whole, and the Senate Democrats as a whole are more conservative than the House and the conference.

So this was really good news for us. We‘re clearly not there, but not a single Democrat has said I‘m absolutely against the public option. Chairman Baucus said he likes it but he wants to see if it can get 60 votes. And we‘re feeling that we might get there.

MATTHEWS: If you lose by the—lose the same percentage of Democrats on the floor or anything like it, you can‘t get—well, you‘d be lucky to get 50 votes, wouldn‘t you?

SCHUMER: Yes, but.

MATTHEWS: How many Democrats oppose the public option right now in the Senate?

SCHUMER: Well, very few. Even Conrad and Baucus today said that they were open the public option as we move to the floor. So, there has been no commitment. Senator Baucus said that he needs to see that it has 60 votes. That‘s a reasonable request, and we‘re going to show him.

I have talked to every member of the moderate Democratic caucus. None of them have closed the door on the public option. There may be some adjustments and tweaks we have to make, but I think we‘re in pretty good shape.

And then you get to the conference where Nancy Pelosi says she wants a strong public option. And as you see it unfolding, we‘re moving in the direction of getting a public option.

MATTHEWS: Mr. Conrad disagrees with you, right? He says there‘s not enough votes for 60 votes. You can‘t get a unanimous Democratic Party or near unanimous vote for a public option. So, there is a disagreement on this. Right?

SCHUMER: There is a disagreement, but I think that today‘s debate, where we clearly had the momentum, where the people against us were quite positive in their comments on the substance.

And one other thing that‘s happening. It‘s sinking in. You know, in August the right wing launched all of their attacks on public option and said it‘s a government takeover.

What has happened now is as people learn what it really is, we‘re not going to get Republican votes, that‘s for sure, but more and more Democrats are open to it. As I said, when we began this morning, we were two votes fewer than we had on the vote itself. We were pleasantly surprised by getting 10, and with some moderates voting with us. And so—Bill Nelson, Tom Carper who, you know, are no different than the moderates on the floor.

So, I think that we‘re feeling good. And all of us are pleasantly surprised that we‘re making progress. A month ago, people said the public option is dead. They‘re not saying that anymore.

MATTHEWS: Let‘s take a look at this. I want your response on tactics since you‘re a leading member of the Senate. Here‘s a TV ad that‘s running in the District of Columbia and also running in Montana. Let‘s listen, Senator.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Last June, I collapsed because of congenital heart problems. I need open-heart surgery but have no insurance and no company will insure me. My friends and family have been a blessing. With hearts as big as the Montana sky, they‘ve helped with bake sales and benefits. But my wife and I still owe over $100,000 in medical bills.

None of this debt would have piled up if I‘d had the option of buying into a public health insurance plan. Senator Baucus, when you take millions of dollars from health and insurance interests that oppose reform and oppose giving families like mine the choice of a public option, I have to ask, whose side are you on?

(END VIDEO CLIP)

MATTHEWS: Is that hardball working, Senator?

SCHUMER: No, it‘s not.

MATTHEWS: I know the interest groups, they come by and they love this stuff because it‘s the hardball they love, but are the netroots and the people like that who are playing tough with these guys working and helping you up there?

SCHUMER: I think it‘s—yes—no, it‘s hurting us, and I wish they wouldn‘t do it. What we have to do is show Max Baucus that we have the votes. Today he said he likes the public option. If he thought there were 60 votes on the floor of the Senate, he would be for it.

His job is to get a bill through, and we all know that getting a bill through is job number one. And we‘re showing him. My guess is that if you ask Max Baucus at the end of today, he was impressed. He was impressed with the arguments. He was impressed that we picked up some moderates on the Finance Committee who people didn‘t expect. And that‘s going to continue on the floor.

MATTHEWS: Are you hopeful about Maine? You have got Senator Olympia Snowe out there discussing this issue. She was against you today, but I‘m wondering, according to the polling I‘m getting from the—again, from the interest groups that are pushing for this on the liberal side of things that overwhelmingly the people of Maine want the public option. Is that going to help you?

SCHUMER: I think the polling is helping us. After all of the attacks leveled at the public option, a New York Times survey which asked the question right down the middle found 65 percent of the public are for it. And that‘s what Democrats are realizing.

Here‘s what is going on here. We have to bring the whole party together. We can‘t rely on any Republican votes, as much as we would like to have Olympia and hope we will have her. And so the more moderates in the party know that they have to come together with the more liberals in the party, and there are a whole bunch of different issues.

And I think, my view, the way I would structure it, having a public option is something that everyone can support and they‘ll give us some flexibility in other areas. And I think as those of us who are putting together the final bill will study it, that‘s what others are going to find out.

So, you know, we lost today. We said we were going to lose before the day began. We didn‘t expect it would be this close. And there‘s momentum. It‘s going to keep getting better. Better on the floor than in the Senate and better in the Senate Finance Committee and better in the conference where the House has 70 to 100 members who say they won‘t vote for anything without a public option.

MATTHEWS: Well, you‘re a fighter, Senator Schumer. It‘s good to have you on the show. Clearly, you‘re not giving up. You see victory there. Thank you so much for coming on.

Let‘s go now to Republican.

SCHUMER: Thank you. Keep watching.

MATTHEWS: . Senator Orrin Hatch of Utah. He is a member of the Senate Finance Committee.

Well, there is Senator Schumer putting the best face on a 13-10 loss. Three Democrats joined your party in opposing a public option. Five Democrats joined you on another vote. Where does it stand, the public option, right now?

SEN. ORRIN HATCH (R-UT), FINANCE COMMITTEE: Well, it‘s going to be very difficult. Look, the Democrats are going to do everything they can to pull every trick they can to try and get all of the Democrats lined up to go with a public option.

But, look, if you pass a health care bill that involves one-sixth of the whole American economy and you don‘t get at least 70 votes, meaning bipartisan votes, you‘re not doing what‘s right for the American people. And I can tell you right now, Doug Elmendorf said that it‘s virtually next to impossible to be able to have a public option which would be a level playing field.

There‘s no way it would be level, and that‘s one of the problems. And I think the people out there realize that. And they also realize that you know they promised the same level playing field for Medicare back in 1965. It wasn‘t long until they realized they couldn‘t keep up and had to start setting prices.

Today Medicare pays less than 20 percent to doctors, less than 30 percent to hospitals, and by the way, Medicare‘s $38 trillion in unfunded liability, that‘s what you get when you just have the federal government involved.

MATTHEWS: Do you think there‘s any chance—let me ask you if you would be open to it. If this thing looks like a draw, if it looks like the Democrats are not going to get enough of a bill by Thanksgiving that they can claim victory with and they see that coming, is there any chance they‘re going to sue for peace like I guess we did with Laos back in the ‘60s when Kennedy said, we can‘t win the war, let‘s get together and go to Geneva?

Is there any chance that your party would want to help this president get anything through, or do you want him to lose, period?

HATCH: I can tell you how to do it right now, I mean, there—in a bipartisan way. And there are some Democrats who really literally would like to work with us and get this done. There are ways of doing this, and ways of—but we‘re a long way from that right now.

And I have to tell you, the Democratic party has gone very far to the left. Some of our party has gone pretty far to the right. And to be honest with you, I don‘t know many moderate Democrats. There are a few, but certainly not like Chuck Schumer has been talking.

MATTHEWS: Well, there aren‘t many moderate Republicans left either. Let me ask you, Senator, as you know the Northeast is withering. Let me ask you, do you—would you sign on to any health care bill this year, any bill?

HATCH: Well, yes, if we could do it right. You know, to be honest with you, they want to do this public option or what I call a government option, and yet they want to take $500 billion out of Medicare. And.

MATTHEWS: Yes, I know. Well.

(CROSSTALK)

HATCH: Well, suppose they drop the public option and put in tort reform. Would you sign on? Right on that trade, right there. Get rid of the public option and go to tort reform.

MATTHEWS: Well, tort reform would be a way to go. I just read an article where.

HATCH: Well, would you be on the bill? Would you be on the bill then, or is it just a stupid negotiation? Are the Democrats negotiating with themselves? If no Republicans will join, why should they compromise with nobody?

HATCH: Well, personally, I believe what we ought to do is what we did with the original CHIP bill that everybody said worked beautifully. What we did is we block-granted it to the state, let the states set their own standards and work it out in the states according to their own demographics.

We have 50 states. We have 50 state laboratories. We can look and see what really works and what really doesn‘t. Pick and choose from the other states. But the fact of the matter is if we did something like that, there‘s about 80 percent of health care that I think we could bring both sides together on.

The problem is when you get to the money, Democrats are—they want to spend and they think everything can be solved by spending. Well, we can‘t spend the way they want to. If we do that, we‘ll bankrupt the country and we won‘t get a very good health care bill to boot.

You know, the federal government isn‘t the last resort. It isn‘t the last dance in everything.

MATTHEWS: I understand.

HATCH: In fact, it‘s a problem.

MATTHEWS: All right. Let me ask you about your abortion option. It sounds right to me. You basically say if a woman—obviously a woman, would want to have—if she would like to—want to have the option of having abortion covered in her plan, she would pay a bit more. Do you think that will pass the Senate, that proposal, your proposal?

HATCH: Well, I don‘t know. The thing I‘m really concerned about is having taxpayers pay for abortions.

MATTHEWS: Right.

HATCH: There is a high percentage of taxpayers that just do not believe in that and they don‘t want to be saddled with paying for abortions for other people. And we haven‘t done that since the Hyde Amendment back in the ‘70s.

And now all of a sudden even though they say abortions won‘t be covered, there are ways that it can be covered under the language of this bill.

HATCH: So I‘d like to change that because I think that we‘d have a much greater chance for bipartisanship if we could amend some things like this.

MATTHEWS: Except you still won‘t vote for the bill.

HATCH: Well, look, I could vote far bill if we did it the right way. You know, look, I‘ve been part of putting together very good health care bills for 33 years.

MATTHEWS: Right.

HATCH: I‘m not new to this process. But I‘ve got to tell you, it‘s a one-size-fits-all approach that the Democrats are taking. They‘ve tried to take advantage of the fact that President Obama is extremely popular and they thought they could just throw this over on the American people.

And they‘re not going anywhere because there are enough Democrats that are concerned about it, and almost every Republican.

MATTHEWS: Well, I think your abortion amendment makes sense. We‘ll see how that goes in the full Senate. Thank you very much, Senator Orrin Hatch of Utah.

Up next, filmmaker Michael Moore. His new film is called—well, it‘s a bit of irony here, I‘m not sure he means it, “Capitalism: A Love Story.” He‘s coming here, right to this desk. You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Coming up next, filmmaker Michael Moore is coming here. He‘s going to be right here at this table to talk about his new movie, “Capitalism: A Love Story,” but I don‘t think it is. HARDBALL returns after this.

MICHAEL MOORE, DIRECTOR, “CAPITALISM: A LOVE STORY”: See that guy standing next to the president? You know, the one that looks like a butler? His name was Don Regan, the chairman of Merrill Lynch, the richest and biggest retail brokerage firm on the world.

He took the key position of treasury secretary so he could enact the tax cuts that the rich wanted. Regan then became White House chief of staff as the president started to fade.

RONALD REAGAN, 40TH PRESIDENT OF THE UNITED STATES: Then they should give the president what 43 governors have, a line item veto.

(APPLAUSE)

MOORE: Who tells the president to speed it up? The man from Merrill Lynch, that‘s who. Things in America would never be the same again. The country would now be run like a corporation.

REAGAN: We‘re going to turn the bull loose.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

That was, of course, a clip from the new documentary—well, if you haven‘t seen it yet—I haven‘t seen it—“Capitalism: A Love Story.”

MATTHEWS: So, how do you explain that? And you make the point that Reagan was in the ownership of the stock market, the big shots at Merrill Lynch. How could he fire a guy if he was working for the guy?

MOORE: You know, they used to—back then, during the Reagan years, the Department of Commerce would provide funds to help American companies set up shop in border towns in Mexico. I mean, our tax dollars...

(CROSSTALK)

MATTHEWS: Yes, I‘m with you. Boy, I‘m with you.

And I look at what happened in Pennsylvania, a place where I grew up. They used to have jobs. You come out of high school, you get a job working at a factory. You can provide for your family.

As you say in your movie, one person in the family working, if the other person didn‘t want to go work outside the home...

MOORE: Right.

MATTHEWS: ... it worked.

Let‘s take a look at another clip. And this is where it gets hairy. What do we do with this complicated business stuff that I don‘t understand, hedge funds, derivatives? And, yet, you have to deal with the people that do understand it when they screw it up. And then they come down to Washington and tell us what to do, because we‘re all scared to death.

MATTHEWS: So, there you are driving a Brinks truck right into the building, trying to arrest these people.

But you know what gets me? And I don‘t understand how to deal with this. I know you‘re a little more—maybe more to left than me on this, but let me ask you a question. What do we do in a complicated financial society, where people who run Merrill Lynch, who run Goldman Sachs, are the only people that understand how the thing works?

MOORE: Well, just like when they say, if it‘s too—too big to fail, it‘s too big to exist, we should also have a position that, if you can‘t explain these complicated derivatives and credit default swaps, then they can‘t exist.

If the federal government is supposed to regulate this—and the guy talks about it in the film, how regulators would come, and they would just run circles around the regulators who didn‘t understand it, and so they were just allowed to keep continuing placing bets on money, people—losing people‘s pension funds in the process, taking insurance out on their own bets.

MATTHEWS: I think that was the best thing in your movie, by the way,.

It‘s called peasant—what is it, dead peasant...

MOORE: Dead peasants insurance is what corporate America, amongst themselves—they don‘t—they don‘t want this to be public. They take out life insurance policies on the employees, big companies, Procter & Gamble, McDonnell Douglas—McDonnell Douglas, Hershey.

MATTHEWS: Do they bet on unhealthy people dying?

MOORE: Yes. they actually—and they name the company as the beneficiary. So, the sooner an employee dies, the more money, obviously, the company can make. It‘s—it‘s..

(CROSSTALK)

MATTHEWS: Can‘t you sign a living will or something that says nobody can insure my death and make money off me going?

MOORE: No. But I—but, you know, Representative Gutierrez from Chicago, he saw the film over the weekend. And I believe, yesterday or today, he‘s—he‘s submitting...

MATTHEWS: OK. Let me tell you, all over Europe right now—and you follow politics as much as I do—the social party, the social democratic parties are losing. Merkel is winning big in France—in Germany.

The French—Sarkozy beat the hell out of Royal, who ran against him. Gordon Brown is headed down. If a social democratic alternative, which I think is what you advocate, some kind of social democracy, why is it not working in Europe? Why is it—why are people voting it out of office?

MOORE: Well, they‘re not voting out their universal health care. And they‘re not voting out their free or next-to-free college education for their kids, or their easy...

MATTHEWS: So, the moderate or the right-wing parties have absorbed that stuff?

MOORE: Absolutely.

The conservatives in those country have—countries have to support those issues. I think, in each of those situations—Gordon Brown is just not a popular figure. The...

It‘s basically a setup for that this film is about a different kind of bank robbery, as—Bill Black, the bank regulator, wrote a book called...

MOORE: ... “The Best Way to Rob a Bank Is to Own One.”

MATTHEWS: You‘re a filmmaker, a provocateur. You‘re not a politician.

MOORE: That‘s right. Right.

MATTHEWS: And, in fact, I don‘t even think you‘re an activist, exactly.

MOORE: Well, I‘m a citizen of a democracy, so that means I‘m an activist.

MATTHEWS: What do you want people—what do you want people to do after—what do you want people to do after they see movie? Bring down capitalism, bring in social democracy? What do you want—what do you want a person to do, to vote like when they come out of here?

MOORE: I want them to start pressuring our Congress, get the money out of politics. We need publicly financed elections. And we need the—the people deciding how this democracy is run and this economy.

That‘s not what‘s happening anymore. The richest 1 percent have more financial wealth now than the bottom 95 percent combined. That...

Guess which “Sideshow” personage is using me, moi, to raise money for her reelection out in Minnesota? I think you can guess by now.

That‘s coming up next. You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL.

Time for the “Sideshow.”

First up: “Sideshow” all-star Michele Bachmann.

Former Senator Norm Coleman has sent out a fund-raising letter on her behalf, on behalf of the Minnesota congresswoman, throughout the state. He‘s out there hustling money for her using the name of a colleague of mine and me, of all people.

If you‘re a member Congress right now, you‘re getting pressure from all sides over the health care bill. The latest pressure group going to work on Capitol Hill? Republican governors. How many have or will send letters to their delegations saying that the Democrats‘ health care bill will bankrupt their states?

Well, according to the Hill, a newspaper that covers Congress, 14. Fourteen Republican governors launch a coordinated attack against the Obama health care plan, claiming it will bankrupt their states. Fourteen GOP governors go to war with Obama‘s health care—tonight‘s “Big Number.”

And coming up now: The Republican Party struggles to redefine itself. And two rising stars may play a bigger role in the party‘s future. There she is, Sarah Palin, who is making news with a new book coming up, and Liz Cheney, daughter of the former Vice President Dick Cheney. He pronounces it differently.

Stocks sliding today on some mixed economic data—the Dow Jones industrials down 47 points. The S&P 500 lost two points, and the Nasdaq fell more than six points.

A surprise drop in consumer confidence rattled investors. Retailers were hoping that confidence would climb, especially with the holiday shopping season around the corner. The drop in consumers‘ moods overshadowed a better-than-expected housing report. Home prices were up for a third straight month in July, after a three-year slide.

Shares in Nike moving higher after hours after posting earnings just after the bell. The world‘s largest footwear company beat expectations, posting profits higher than last year‘s levels.

And Toyota is recalling 3.8 million vehicles for problems with the driver‘s-side floor mat. Federal officials say owners of many Toyota and Lexus models should remove those floor mats immediately.

That‘s it from CNBC, first in business worldwide—now back to

HARDBALL.

MATTHEWS: OK. Let‘s talk politics. Welcome back to HARDBALL.

After a trouncing in 2008, the Republican Party is having what they call in sports a rebuilding year. And two of the marquee names that have emerged are Liz Cheney, daughter of the former Vice President Dick Cheney, and Sarah Palin, former V.P. candidate.

In a front-page “New York Times” piece headlined “New Cheney Taking Stage For the GOP,” Liz Cheney was called a red star rock star by a Republican event organizer. Hmm. Sarah Palin‘s upcoming book, “Going Rogue,‘ is expected to be so popular that the publisher has ordered a first printing of 1.5 million copies, the same amount as for Senator Ted Kennedy‘s memoirs.

So, as the Republican fights to define itself, could Sarah Palin or Liz Cheney lead the way?

That‘s the question for the strategists. Their names are Steve McMahon here on the left—he‘s a Democratic strategist—and Todd Harris.

By the way, they really are. Those names are thrown around, strategists. These guys really are.

MATTHEWS: I believe, if you‘re going to have a fund-raiser in Salt Lake City or in Oklahoma City at one of the men‘s club, where all the business guys get around, she‘s still the starring attraction. I would bring her in, rather than Mitt Romney.

HARRIS: To answer your question, I‘m working on races all across the country. I look at a lot of polling data for Republican primary voters. Sarah Palin, her popularity is off the charts with the base of this party.

MATTHEWS: Right.

HARRIS: I would take her in to raise money. I would take her in to organize activists.

MATTHEWS: Would you like to be her brain, in other words, the person who read the books for her and tells her what to say? Would you like that job? I‘m serious.

HARRIS: I‘ve been pretty critical of her. So I‘m not sure that she would want me to have that job.

MATTHEWS: Would you like to be her Ted Sorensen?

HARRIS: I‘d like her to come in and campaign for any one of my candidates. How about that?

(CROSS TALK)

MATTHEWS: Can we ask a nonpartisan question. She‘s a very attractive woman. Is a lot is just star quality. The visual, not just the looks god gave her, but the walk on the stage, do that propeller wave, all the gestures, talk with the voice going up and down—that whole show she puts on is really to me attention grabbing. It‘s not your usual boring guy out there.

HARRIS: No. No. She is white hot as far as her ability to capture the attention of not only the press but the public. She is probably hated as much as—by the left as much as she‘s loved by the right, which makes her a very fascinating --

MATTHEWS: Did she deliver south Florida to the Democrats last election? That‘s what I heard. The people with brains say, we do not want that theocrat running the country with her attitude about god and everything else.

MCMAHON: It wasn‘t just South Florida that people were saying that. There were people all over the country who said that. I think one of the reasons that so many red states flipped to blue is because Sarah Palin was on the ticket.

If John McCain had picked Christie Todd Whitman, instead of Sarah Palin --

MATTHEWS: She‘s pro-choice. He probably would have had another fight.

MCMAHON: But he would have had a fight with his base, which would have demonstrated that he is the maverick he tried to pretend to be. Instead, he went in the other direction.

(CROSS TALK)

MCMAHON: There‘s one thing that I do really agree with Steve on. That is that her popularity I think ends—I should say is largely diminished the day that her name actually appears on the ballot.

MATTHEWS: For next year and a half or so, she‘ll be up there making speeches at close to 100,000 dollars a piece. She‘ll be extremely wealthy when this is all over. She will have spoken to so many groups, the dentists, the airplane flyers. Everybody in the world is going to hire her to come give a speech because she‘s a show. Right?

Will that do her good, speaking in money speeches? Do they help her ahead politically, those money speeches?

HARRIS: If that‘s all she‘s doing, it‘s going to hurt her quite a bit. If, at that same time, she‘s defining what she actually believes about foreign policy, about economic policy, about health care—

MATTHEWS: Can she do that without reading anything? I‘m dead serious. Doesn‘t she have some homework.

MCMAHON: Of course she would. But if she ran against Barack Obama as the nominee of the Republican party, it would be 400 electoral votes instead of 300.

MATTHEWS: Do you agree with that?

HARRIS: Yes, I do. Look, I‘ve been critical of her. I don‘t think she should be the nominee of the Republican party. Having said that, she‘s loved by the base.

MATTHEWS: Do you guys have anything between Mitt Romney, on the less charismatic end of the spectrum, and she‘s sheer charisma, with perhaps all sail and no ballast. He‘s all ballast. Do you have anybody with an equal measure of sail and ballast?

HARRIS: When people are losing their jobs, they like a ballast kind of guy. That would be my pitch for Romney.

MATTHEWS: Are you pitching for the count?

ROMNEY: No. Maybe.

MATTHEWS: I think I just heard a pitch, Governor Romney. This guy, Todd Harris, would like to handle your ballast.

MATTHEWS: She doesn‘t go by her maiden name. She goes by the name that she‘s changed it to. She calls herself Cheney.

Up next, a stern warning from Congressman Patrick Kennedy, who says he‘s worried the heated rhetoric of today‘s health care debate could lead to violence. Take it seriously from him. We‘ll get into that next in the Fix. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We‘re back with the politics fix. Melinda Henneberger is with PoliticsDaily.com, and Charles Blow is a columnist for the “New York Times.”

Let me start with Melinda, then get to Charles for the same question to both of you. I love politics when it gets down to voting, and you get counting. And after all the talk and PR and BS and everything, it finally comes down to people vote. And the great thing about the United States Senate is you have to vote in public.

Now, Carper of Delaware, Nelson of Florida, Baucus of Montana, Lincoln of Arkansas, and Conrad of North Dakota have now all separately voted against the public option in the Finance Committee. We had a very nice performance here by Chuck—Chuck Schumer. And I think it was performance. It was a gung-ho, we can still win, even though we‘re losing.

My question, Melinda, how can the liberals, the net roots people, the people on the left continue to say there‘s a viable opportunity for a public option? How can they say it?

MELINDA HENNEBERGER, POLITICSDAILY.NET: Well, the public option is dead, and I think that‘s a shame. And I think that it does look bad for these moderates, who perhaps for political reasons had no choice. But, I mean—

MATTHEWS: Wait. What do liberals do? Do liberals operate by a different motive than politics? You say moderates operate because of political considerations. Is there anybody in politics that doesn‘t operate by political consideration? I want to get a—I want to find this person who doesn‘t pay attention to who they represent at home.

HENNEBERGER: Of course they have to pay attention to that. But I think, for me, the bottom line is today is a huge win for the insurance industry. I mean, they‘re going to have 40 million new clients. And they‘re going to—

HENNEBERGER: Yes, they went in the tank. I think it‘s a really sad day when it‘s the victory for the insurance company. They‘ve got all this new business. They‘re supposedly going to have to have—you know, give into a few little reforms, but if they don‘t, there‘s still no public competition for those companies.

MATTHEWS: Charles, is that the way you see it? It was a buyout by the insurance industry? That‘s why they oppose the public option?

CHARLES BLOW, “THE NEW YORK TIMES”: I‘m not sure about that. But I‘d like to make the point that this is not over. You know, it doesn‘t look good, absolutely not. But this is one bill of at least two, I guess, in the Senate. You know, you have bills in the House. You have to—whatever passes you have to, you know, reconcile those two bills.

I think it‘s a little too early to completely say that it is dead. It doesn‘t look good, though.

MATTHEWS: You know what I‘m asking, Charles. I‘m pushing you. We don‘t have much time. It seems to me if everybody says, well, if you‘re further over on the left, you‘re more aggressive—you say, we don‘t need 60 votes. We‘ll do it with 50. Right now, it looks like you won‘t get 50, if you just do the straight line proportionality here. They have lost up to five votes out of 13 on one version of the public option in committee.

You get to the floor, they only have 60 to start with, counting Bobby Byrd, who may not be there. That‘s 60. If they lose ten of them, they don‘t get to 50. They could lose 11 the way this is going. It doesn‘t look very strong, this public option push, Charles.

BLOW: I agree with you. I think it doesn‘t looks strong. I‘m not willing to say it‘s dead quite yet. It just doesn‘t look good. I agree with that.

MATTHEWS: Let‘s take a look at Patrick Kennedy here, on a more scary point. Here is talking about his dad and some of the sounds of this fight that he doesn‘t like.

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REP. PATRICK KENNEDY (D), MASSACHUSETTS: The most threatening thing about, you know, the protest that occurred a couple weeks ago is that they focused on the very violent rhetoric. You know, it was—you know, very Obama-care with Kennedy. That kind of ugly, ugly, violent rhetoric—and that doesn‘t serve our country.

It‘s not—you know, we‘ve had—my family has seen this up close too much, with assassinations and violence in political life. It‘s a terrible thing when people think that in order to get their point across, they have to go to the edge of violent rhetoric and attack people personally and attack their motivations without attacking just the issue.

MATTHEWS: He‘s talking, of course, about that sign, “bury Obama-Care With Kennedy.” Your thoughts, Charles, about the son sort of talking about his dad and his legacy and how it‘s used here perversely?

BLOW: You know, I think that‘s very personal to him and I can

appreciate that sentiment. I think that, you know, for America writ large

· I‘m a product of the south. I was born and raised in Louisiana. I‘ve seen enough nastiness up close that this doesn‘t shock me at all. In many ways, it‘s kind of a good thing for America writ large to see this thing up close.

You know, sun light is the best disinfectant. It‘s nice on some level for people to understand that this sentiment exists, has existed, and will continue to exist until we start to shine a light on it, until we start to call it out, until we start to say this is unacceptable. You can disagree with me personally, but you can‘t go this far.

MATTHEWS: The problem is it‘s not all show. These guns are loaded people are bringing to these meetings. These guns are dangerous. Anyway, we‘ll be right back with Melinda Henneberger and Charles Blow. I‘ll say it again, the NRA should say you have a right to bear arms, don‘t take it into politics. You‘re watching HARDBALL, only on MSNBC.

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UNIDENTIFIED FEMALE: The jury of International Film Festival has decided to proceed in honoring films and film making, despite the Philistine nature of the collusion that has now occurred. We came to honor Roman Polanski as a great artist. But under these sudden and arcane circumstances, we can only think of him, today, as a human being, uncertain of the year ahead.

MATTHEWS: That‘s the voice of Hollywood, actress Deborah Winger (ph), at the Zurich Film Festival, defending Roman Polanski. We‘re back with Melinda Henneberger and Charles Blow for more of the politics fix. There she is using the language of the sophisticates, saying those who support prosecution for this guy for having sex with a 13-year-old, after getting her boozed up and drugged up, are Philistines, using arcane legalities to get him. What do you think of that?

HENNEBERGER: That‘s exactly right. We had a piece today that I thought was great on just asking the questions, if Roman Polanski were Father Polanski whether all of Hollywood would be defending him and whether they would be saying, it‘s a long time ago. The woman now has grown and doesn‘t want to pursue it.

I really don‘t think so. I think it‘s indefensible and he should be held to the same standard that the pedophile priest would be.

MATTHEWS: We had a great debate last night between Wendy Murphy, the prosecutor, quite zealous on this—I can understand that—against Willie Brown, who is a friend of Polanski, and certainly made the best possible defense on legal grounds, not moral grounds. He thinks he‘s actually guilty.

Your thoughts, Charles Blow, about the importance of this case. It seems to me it bring up the whole question of gender rights, gender recognition, even. If you listen to, ironically, Deborah Winger, it‘s as if the victim in this case was some arcania, a person irrelevant to our modern lives.

BLOW: Yes, it‘s ridiculous. I find this—I went back and read the grand jury testimony today. It‘s disgusting. And he absolutely must be brought to justice. She‘s 13 years old. If you‘ve forgotten what that means, that‘s the eighth grade. She‘s drugged up. She‘s on—you know, full of champagne. He does everything to her—almost everything you can do to a human being sexually.

It‘s an outrageous case. There‘s no defense. I‘m the father of a 12-year-old. If you look at my daughter crazy, you need to get the handcuffs.

I get really exercised about this. I cannot figure out how you can defend this because of the art that he produces or the fact he was able to evade for so long. It doesn‘t—rape cannot be undone. You cannot un-rape a person.

MATTHEWS: Charles, thank you so much. Charles Blow of the “New York Times,” Melinda Henneberger, thank you for joining us. Right now, it‘s time for “THE ED SHOW” with Ed Schultz.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.